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Global Talent 2021How the new geography of talent will transformhuman resource strategiesA report produced in collaboration withTowers Watson, AIG, American Express,British American Tobacco, the Center forEffective Organizations at the Universityof Southern California, Cummins,Coca-Cola, Edison International andthe Organization of American States

Global Talent 2021How the new geography of talent will transform human resource strategiesExecutive summaryTectonic market shifts are transforming the global business landscape. Economicrealignment, advances in technology, the globalization of markets, changingdemographic trends, new customer needs and increased competition are radicallyaltering how companies operate in virtually every industry and region of the world.Evidence of this new world order can be seen in the trade numbers. In 1990, thetotal of the world’s exports and imports accounted for only 30% of the world’sGDP—today, they make up more than half.In 1990, the total of theworld’s exports andimports accounted foronly 30% of the world’sGDP—today, they makeup more than half.These structural shifts are reshaping both the supply and demand for talent acrossthe globe. To cope with a changing business environment, employers are demandingnew skills from their employees, yet often find they are in short supply. The paradoxis profound: On the one hand, 40 million workers in the industrialized world areunemployed, according to recent estimates by the International Labor Organization.Yet executives and managers tasked with hiring new workers often say they areunable to find the right people with the proper skills to fill their vacancies.Meanwhile, the sources from which talent might be recruited are also realigning.More talent is being “home grown” in the developing world, and as a result, ourforecast shows that over the next decade, new and sometimes unlikely regionsof the world will generate a surplus of talent. By contrast, other regions—like theUS and much of Europe—will confront the need to undertake a critical “reskilling”of labor to meet the new demands of a highly digitized and interconnected worldwhere higher skill sets will be required.To make their organizations more effective in the face of sweeping business change,HR leaders will need to rethink their techniques for managing talent and ensure theyare aligned with the new strategic objectives of their organization. Increasingly theywill need to develop more evidence-based approaches to manage global talent—drawing on improved analytics to identify talent segments and gaps, optimize resourceallocation, integrate workforce plans and manage unavoidable risk.Whether the issue is opening a new plant in a distant market, identifying the firm’snext set of corporate leaders, or preparing for a new customer strategy, the HRexecutive is emerging as a key strategic player proficient at using evidence-basedanalysis to influence corporate decisions. As Samira Kaderali, Director of StrategicWorkforce Planning at American Express puts it, “The notion of HR being muchmore analytic and data-driven provides a foundation for HR to be a strategic partnerto the business, to help drive business results—this is the conversation that all thebusiness and HR leaders want to have.”To help explore how market transformation will affect senior HR executives and thecompanies they serve, Oxford Economics undertook an extensive, two-prongedresearch program. We conducted a global survey of 352 HR professionals in the firstquarter of 2012, to examine how rapid globalization and the transformation of thebusiness environment will affect workforce needs in the future, and the implications ofthese shifts for senior business and HR executives. We also undertook an extensivemodeling exercise of 46 countries and 21 industry sectors to understand where the2OXFORD ECONOMICS

Global Talent 2021How the new geography of talent will transform human resource strategiesshifts in the supply of talent will occur over the next decade. To supplement the resultsof our quantitative research, we conducted a series of in-depth interviews with HRexecutives across the globe and drew on the expertise of our HR steering committee.Our research reveals not only that tomorrow’s landscape for global talent will bedramatically different than that of today, but that some countries and industries willneed to adapt more quickly to accommodate these rapid shifts. This report offersthe highlights of our analysis.Who took the survey?This survey was conducted in the first quarter of 2012, reaching a total of 352 human resourcesprofessionals around the world. Of them, roughly one-third were CHROs (Chief Human ResourceOfficers); another third were senior vice presidents, vice presidents or directors of HR; and therest were HR managers and analysts. About 22% came from companies with between 25 mand 250 m in annual revenue; 31% between 250 m and 1 bn; 23% between 1 bn and 5bn; 18% between 5 bn and 50 bn; and 5% over 50 bn. The survey reached executives in allregions around the world and represents a wide range of industry sectors.Figure 1: Survey respondent titlesWhat best describes your role in your firm?Director of HumanResources14.2%Chief HumanResourcesOfficerVice Presidentof HumanResources32.1%7.1%Senior VicePresident ofHumanResources12.2%Manager ofHuman Resources23.6%HumanResourcesSenior Analyst10.8%Source: Oxford Economics3OXFORD ECONOMICS

Global Talent 2021How the new geography of talent will transform human resource strategiesMarket transformation is redefining thesupply and demand for talentEverywhere across the globe, wrenching business changes are touching everyfirm and industry. Profound shifts in the global marketplace are ushering in a newera of complexity, uncertainty and change for companies. The rise of the internetand related technology has accelerated these market shifts, up-ending businessstrategies, models and processes along the way.“Our transformation hasreally shifted the way wethink about our businessstrategically.”Libby Wanamaker, GlobalDirector, ProgramDevelopment for Coca-ColaSurvey participants identify advances in technology (42%) and globalization (41%) aswell as shifts in labor demographics (38%), customer needs (38%) and competition(38%) as underlying forces that will have the biggest impact on their organization’stalent requirements in the years ahead. Even for firms that have operated across theglobe for decades, the issues are substantial and ever more complex. “Ultimatelyour company has come to terms with the fact that we are truly a global entity thatneeds to operate at both the global and local level,” explains Libby Wanamaker,Global Director, Program Development, Coca-Cola. “Our transformation has reallyshifted the way we think about our business strategically.”Business transformation requires new skillsAs a result of these rapid shifts in the market, the vast majority of companies areengaging in transformation initiatives to rethink their global strategies, business modelsand organizational approaches. Indeed, according to our survey, 41% have recentlycompleted a significant transformation initiative or are currently undergoing one. Andanother 47% of those surveyed are preparing to do so. For certain industries, such asfinancial services and heavy manufacturing, the total of those that have or plan to gothrough business transformation is even higher (more than nine out of 10).Figure 2: Transformation is pervasive across industriesPlease select the statement that best applies to your firm’s business transformation efforts.Recently completedCurrently undergoingPreparing to undergoNot avel andtransportationTICE 5bn 1bn0%20%40%60%80%100%% of respondents*TICE refers to the Technology, Information, Communications and Entertainment industriesSource: Oxford Economics4OXFORD ECONOMICS

Global Talent 2021How the new geography of talent will transform human resource strategiesThis transformation also requires a repositioning of employee skill sets, across alllevels of employment. Our study identified four broad areas where skills will be ingreatest demand. These include:1. Digital skills. The fast-growing digital economy is increasing the demand for highlyskilled technical workers. In particular, the emergence of social media is puttinga premium on developing new forms of digital expression and marketing literacy.According to our survey, of all technical capabilities, digital business skills are seenas most critical—particularly in Asia-Pacific, where e-commerce is mushroomingbecause of the early adoption of new digital technology as way to “leapfrog” aninefficient legacy infrastructure. In Europe, where economic conditions are weaker,the use of business software and systems to build internal efficiencies will continueto be a high priority.2. Agile thinking. In a period of sustained uncertainty, where economic, politicaland market conditions can change suddenly, agile thinking and the ability toprepare for multiple scenarios is vital. In industries that face significant regulatoryand environmental cross-currents, such as life sciences, and energy and mining,the ability to prepare for multiple scenarios is especially important—72% and 71%respectively, compared with 55% for the overall pool of respondents. To succeed inthe changing marketplace of the future, HR executives also put a high premium oninnovative thinking, dealing with complexity and managing paradoxes.Figure 3: Skills in high demand over the next five to 10 yearsDigital skillsDigital businessskillsAbility to workvirtuallyUnderstandingof corporate ITsoftware andsystemsDigital designskillsAbility to usesocial media and“Web 2.0”50.6%44.9%40.1%35.2%29.3%Ability toconsiderand preparefor multiplescenariosInnovationDealing withcomplexity andambiguityManagingparadoxes,balancingopposing viewsAbility to see the“big picture”54.8%46.0%42.9%40.9%15.3%Agile thinking skillsInterpersonal and communication skillsCo-creativity andbrainstormingRelationshipbuilding (withcustomers)Teaming(including virtualteaming)CollaborationOral and ty tomanage bility to workin multipleoverseaslocationsForeignlanguage Global operating skillsSource: Oxford Economics5OXFORD ECONOMICS

Global Talent 2021How the new geography of talent will transform human resource strategies3. Interpersonal and communication skills. Overall, HR executives believe thatco-creativity and brainstorming skills will be greatly in demand, as will relationshipbuilding and teaming skills. This reflects the continued corporate shift from acommand-and-control organization to a more fluid and collaborative style. Asenterprises of the future respond to the development of a “networked” corporateworld, where relationships with suppliers, outsourcing partners and even customersbecome more dispersed and nuanced, the capacity to align strategic goals, buildconsensus and encourage collaboration will become paramount. The challenge ismade all the greater because of the vast variety of geographies and cultures that willbe encompassed by tomorrow’s extended global enterprise.The most dramatic jumpin demand, according tosurvey respondents, willbe in emerging Asia,where the need for newemployees will rise 22%.4. Global operating skills. Reflecting the impetus of firms to expand in marketsaround the world, the facility to manage diverse employees is seen as the mostimportant global operating skill over the next five to 10 years. In the US, wherecompanies are embracing globalization and seeking to penetrate new markets,understanding international business was identified as the top global operating skillrequired. These operating skills will become even more important as globalizationenters its next phase. Indeed, according to Jeff Immelt, Chairman and CEO of GE,firms will increasingly move from “glocalization,” where home market products andservices are tailored to the tastes of overseas customers, to reverse innovation,under which innovation is led from emerging markets and then brought back hometo mature markets. Such global operating trends, which are already evidenced inboth life sciences and engineering firms, will require a global redistribution of keyskill sets.Permanent shifts in the business demand for talentAs firms contend with the transformation of their businesses, and the “reskilling”of their workforces, they must also prepare for long-term, permanent structuralshifts in demand for labor. Indeed, a new geography of talent will come to defineworkplace recruitment.The demand for workers is already more pronounced in emerging markets thanksto continued brisk growth in most of these economies. The most dramatic jumpin demand, according to survey respondents, will be in emerging Asia, where theneed for new employees will rise 22%. Other emerging markets that will see aboveaverage growth in demand are Latin America (13%), Middle East/Africa (13%) andEastern Europe (10%).Demand for talent in Western Europe, by contrast, is projected to grow a rathermodest 3.5%, according to our survey. In some industries like business services,energy, travel and transport, and life sciences, staffing demand will actually declineas Europe copes with its ongoing debt crisis and austerity-driven recession.Somewhat stronger job demand is expected in North America, where surveyedexecutives expect overall employment requirements to rise 6.1% over the next fiveto 10 years as a result of more resilient economic conditions.6OXFORD ECONOMICS

Global Talent 2021How the new geography of talent will transform human resource strategiesFigure 4: The future demand for talentHow will the landscape for talent change over the next five to 10 nEuropeMENALatinAmericaEmergingAsiaTotal (%chang